Valuation adjustment for destroyed property debated

A proposed amendment meant to provide tax relief for those whose property has been destroyed by a natural disaster became the focus of debate on a tax cleanup bill April 5.

Sponsored by Elkhorn Sen. Lou Ann Linehan, LB512 would make several technical changes to state tax law requested by the state Department of Revenue.

As introduced, the bill would allow a property owner to petition his or her county assessor for a reassessment of a property’s value for that year if the property is destroyed or damaged by a major calamity—such as a fire, flood or tornado—between the assessment date and July 15.

A pending Revenue Committee amendment would remove that provision, but Sen. Steve Erdman of Bayard introduced an amendment to include provisions from his LB482, which also deals with changes to the valuation of destroyed property.

That amendment would require a county assessor to report to the county board of equalization all real property that is destroyed by fire or other natural disaster between Jan. 1 and Oct. 1 of any year.

The county board then would adjust the value of the destroyed property based in part on the portion of the year during which the property was intact. The board’s action would apply only to the current assessment year.

Erdman said it is unfair to require property owners to pay property taxes on a home’s full valuation after it has been destroyed by forces that are beyond their control. He said the proposal especially is needed after the destruction caused by the recent floods in eastern Nebraska.

“This bill makes total sense and allows us an opportunity to help people who have had their property destroyed,” Erdman said.

Most counties could raise their property tax levies to make up for any lost revenue due to the change, he said.

Sen. Robert Clements of Elmwood supported Erdman’s proposal. Assuming that 6 percent of the houses in Sarpy County were destroyed by the floods, Clements said, the county would have to increase its levy by approximately 1.7 percent in order to offset property tax revenue lost due to the proposed valuation change.

“I think people would be willing to pay another 1.7 percent for a year to help out their neighbors whose house is completely gone and [who] have a lot more things to worry about,” he said.

Brainard Sen. Bruce Bostelman also supported the amendment, saying it could benefit all Nebraska communities, not just those in rural areas or those affected by the recent floods. Natural disasters can and will affect the entire state, he said, and the proposal would provide some relief to families and businesses that have lost everything.

Sen. Kate Bolz of Lincoln cautioned senators that Erdman’s amendment would reduce property tax revenue to counties that need funds to repair damaged roads and bridges and provide matching funds necessary to receive federal disaster aid.

“While certainly we want fairness and relief, when possible, for those who are affected by emergencies and these terrible circumstances,” Bolz said, “we also don’t want to tie the hands of the counties who are also helping to recover from the flooding.”

Omaha Sen. Ernie Chambers filed a series of motions intended to delay a vote on the underlying bill. He said the amendment’s supporters were asking the Legislature to help their constituents after they opposed other bills introduced this session that would help a number of marginalized groups.

After three hours of debate on general file, the Legislature adjourned for the week before voting on LB512 or the pending amendments. Per a practice implemented by Speaker Jim Scheer, the sponsor of a bill that is facing a potential filibuster must demonstrate sufficient support for a cloture motion before the measure will be scheduled for additional debate.